Cable found resistance in the past week around 1.66 area, from where we saw more than 400 pips of decline. As such, recovery from 1.5780 July was just another three wave pattern, similar to what we have seen in the past months, as marked on the chart.
Well, if we take a look at the shape of the price action from late 2010, then we can see a triangle pattern with wave (E) underway that should remain above 1.5780. So as long this level hold, bullish continuation remains in play.
A triangle appears to reflect a balance of forces, causing a sideways movement that is usually associated with decreasing volume and volatility. The triangle pattern contains five overlapping waves that subdivide 3-3-3-3-3 and are labeled (A)-(B)-(C)-(D)-(E). A triangle is delineated by connecting the termination points of waves A and C, and B and D.
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